• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Thompson Law

Estate & Business Planning Attorneys in Sioux Falls, South Dakota

605-362-9100
Estate Planning Attorneys Licensed in Iowa, Minnesota, Nebraska and South Dakota
  • Home
  • Our Firm
    • About Our Firm
    • Client Testimonials
    • Employment Opportunities
    • Our Team
  • Services
    • Asset Protection & Business Planning
    • Elder Law & Medicaid Services
    • Estate and Gift Tax Figures
    • Estate Planning Review
    • Estate Planning Services
    • Family-Owned Businesses & Farms
    • Incapacity Planning
    • IRA & Retirement Planning
    • Legacy Planning
    • LGBTQ Estate Planning
    • Pet Planning
    • SECURE Act
    • Special Needs Planning
    • Succession Planning
    • Trust Administration & Probate
  • Español
    • Sobre Nuestra Firma
    • Administración de Fideicomisos y Sucesiones
    • Servicios de Planificación Patrimonial
    • Protección de Bienes & Planificación Empresarial
  • Reports
    • Advanced Estate Planning
    • Basic Estate Planning
    • Estate Planning for Niches
    • Trust Administration
  • Resources
    • DocuBank
    • Elder Law Reports
    • FAQs +
      • Estate Planning
      • Families Without an Estate Plan
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Trust Administration & Probate
    • Newsletters
    • Professional Resources
  • Seminars
  • Contact Us
  • Blog

Joint Tenancy Problems in Estate Planning

February 25, 2021 by Academy of Estate Planning Attorneys

Sometimes people use Joint Tenancy as a simple way to do Estate Planning. This can have drawbacks, sometimes serious and unexpected.

hands circling and sharing a fictional house and car

First, why is Joint Tenancy a simple way to do Estate Planning? At the death of a joint tenant, the property automatically transfers by operation of law to the remaining joint tenant(s). This can be attractive because it bypasses the probate process and all it entails. Probate is the process that moves property titled in the name of one person (the decedent) and moves it to the name of another person. Probate is a public process, lacking privacy. Depending upon the state, probate can be costly and time-consuming. With Joint Tenancy, probate isn’t required because it passes by operation of law by its very nature.

However, if a couple wants to avoid probate, while Joint Tenancy avoids probate at the death of the first joint tenant, it doesn’t avoid probate in the estate of the survivor. At the survivor’s death probate would be required unless further planning is done. The problem is the survivor may be unable to plan because of grieving, incapacity, or simultaneous death.

Let’s look at a quick example. John and Mary own their home in Joint Tenancy. This seems to work well for them for years. Driving home from work one day, John has a heart attack and dies. The property transfers by operation of law to Mary. However, Mary’s now distraught from John’s death and puts off planning for the property. Mary dies with the property in her name and a probate is required. Of course, if John and Mary had died in a common accident, probate would have been required, too.

However, there could be more serious problems with Joint Tenancy. Let’s say that Mary in our example above did further planning by adding John and Mary’s only child, Josh, as a joint tenant. While this would avoid probate at Mary’s death, just as it did at John’s death, it causes other issues.

Josh could decide to sell his half of the property. Of course, Mary says he would never do that. Maybe he wouldn’t, voluntarily. However, let’s say Josh is sued and they get a judgment against him. They can satisfy it against any of his assets, including his ownership interest in the property he holds in Joint Tenancy with Mary.

So, in addition to the risk that Josh might not cooperate or could make Mary’s life difficult, his actions could cause Mary to lose the half of the property in Josh’s name to Josh’s creditors. While Mary was trying to save a little money by putting the property in Joint Tenancy, she jeopardized her future.

If John and Mary had utilized a Revocable Trust instead of Joint Tenancy, the property would have avoided probate. If Mary hadn’t compounded the problem by trying to use Joint Tenancy with Josh, she could have avoided losing half the property to Josh’s creditors.

Speak with a qualified Estate Planning attorney about the best way to plan in your situation.

Stephen C. Hartnett, J.D., LL.M.
Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (858) 453-2128

Read the original article at aaepa.com.

  • Author
  • Recent Posts
Academy of Estate Planning Attorneys
Academy of Estate Planning Attorneys
Academy of Estate Planning Attorneys
Latest posts by Academy of Estate Planning Attorneys (see all)
  • The Joy in Joint Trusts - May 16, 2023
  • How Tax and Non-Tax Considerations Impact Estate Planning – Part II - May 8, 2023
  • How Tax and Non-Tax Considerations Impact Estate Planning – Part I - May 1, 2023

Filed Under: Legal Education, Estate Planning Tagged With: estate planning, joint tneancy

Primary Sidebar

News Categories

  • Video
  • Legal Education
  • Estate Planning
  • Event
  • Attorney
  • Estate Planning
  • Elder Law
  • taxation
  • General

Sign-Up to Receive Email Updates

Follow Us

  • Facebook
  • LinkedIn
  • YouTube

Thompson Law, PLLC

Thompson Law, PLLC.
5027 S. Western Avenue
Sioux Falls, SD 57108
Phone: 605-362-9100
Fax: (605) 362-9101

Our phone number can also receive text messages!

Footer

Footer Logo

The information on this website is for general information purposes only. Nothing on this or associated pages, documents, comments, answers, emails, or other communications should be taken as legal advice for any individual case or situation. This information on this website is not intended to create, and receipt or viewing of this information does not constitute, an attorney-client relationship.

Privacy Policy | Terms of Service | Disclaimer | Site Map | Powered by American Academy of Estate Planning Attorneys

© 2023 Thompson Law, PLLC, All Rights Reserved.